Last week in Houston the three KBR-related sentences ranged from 30 months in prison for Jack Stanley to just a year of unsupervised probation for Wojciech Chodan. Jeffrey Tesler was in the middle with 21 months in jail. How do their sentences compare?

CCI did it. So did Nexus Technologies, Inc, Nam Nguyen, Kim Nguyen, and An Nguyen. And now Flavio Ricotti has done it too. They've all pleaded guilty in FCPA cases to violating or conspiring to violate the Travel Act.

The end came last month for a privately-held American company called Nexus Technologies. It pleaded guilty to conspiracy and violating the Foreign Corrupt Practices Act and the Travel Act. As part of its plea, Nexus admitted to operating "primarily through criminal means" -- and it agreed to cease operations.

After being indicted in 2008 with its owner and three other individuals, Nexus tried to mount a defense. In October 2009, the company and its owner and president Nam Nguyen sought more information about who the defendants allegedly bribed, and they filed a motion to dismiss the entire indictment.

An FCPA violation needs an offer, payment, or promise to pay anything of value to a “foreign official." The original indictment claimed that employees of six entities –- the Vung Tau Airport, the Southern Flight Management Center, an aviation industry business, a Vietsovpetro Joint Venture, the Petro Vietnam Gas Company, and the Tourism and Trading Company -– were "foreign officials" because the entities were controlled by Vietnamese government agencies.

The defendants said:

The instant indictment fails to state a criminal offense because it alleges that the recipients of the improper payments were “foreign officials” because they were employees of entities “controlled” by various Vietnamese ministries of the government. Such a definition of “foreign official” is unsupported by the text or the purpose of the FCPA. The FCPA is a public bribery statute which criminalizes improper payments to officials performing a public function. Mere control of an entity by a foreign government no more makes that entity’s employees “foreign officials” than control of General Motors by the U.S. Department of the Treasury makes all GM employees U.S. officials. [our emphasis]

They also said the FCPA’s definition of “foreign official” -- which includes employees of any foreign government “department, agency or instrumentality” -- is unconstitutionally vague. Especially in the context of socialist and communist states like Vietnam, they argued, defining a “foreign official” to include employees of entities solely based on government “control” of those entities would unfairly sweep nearly all economic activity within the scope of the statute.

The government responded two weeks later with a superseding indictment. It was directed to the "foreign official" issues and it escalated the charges from five to 28 counts -- one count of conspiracy, nine counts each of violating the FCPA, the Travel Act, and money-laundering.

The new indictment revised the descriptions of the six Vietnamese entities in question -- saying they were "agencies and instrumentalities" of the Vietnamese government instead of merely being “controlled” by departments, agencies or instrumentalities of the government.

In November 2009, the defendants filed a motion to dismiss the new indictment. They said it still didn't allege that the six entities performed government functions which would make their employees "foreign officials."

In December 2009, the judge denied the defendants’ motion to dismiss without addressing the substantive issue of who's a "foreign official" under the FCPA. After the motion failed, Nexus and the three remaining co-defendants reportedly started serious discussions with the DOJ about plea deals.

It was too late for Nexus; the company was forced out of existence.

What's the case mean?

First, that the government isn't going to budge on its view of who's a "foreign official."

Second, the cost of challenging an FCPA action in court can be enormous. Nexus and co-defendant Nguyen sought dismissal with a frontal assault on the government’s interpretation of a “foreign official.” The DOJ then reached into its arsenal, increasing the charges from five to 28 counts. The nine FCPA charges, nine Travel Act charges, and nine money laundering charges were all based on the same nine transactions. But they multiplied the risk of long-term jail sentences for the individual defendants if convicted.

Third, the trial judge, if he felt strongly about it, could have looked at the issue of who's a "foreign official." He side-stepped it instead, handing the government a victory and the defendants a defeat.

The Justice Department said Philadelphia-based export company Nexus Technologies Inc. and three employees pleaded guilty today to bribing Vietnamese officials.

Nexus pleaded guilty to conspiracy, and to violating the Foreign Corrupt Practices Act, and the Travel Act in connection with commercial bribes and money laundering. Nam Nguyen, 54, of Houston and Vietnam, the president and owner of Nexus, and sibling An Nguyen, 34, of Philadelphia, each pleaded guilty to conspiracy, a substantive FCPA violation, a violation of the Travel Act, and money laundering. Kim Nguyen, 41, another sibling, pleaded guilty to conspiracy, a substantive FCPA violation, and money laundering.

They were arrested in September 2008, along with Joseph T. Lukas, 60, a partner in Nexus until 2005. He pleaded guilty in June 2009 to conspiracy and to violating the FCPA. The DOJ said he admitted in his plea that from 1999 to 2005, he and others at Nexus bribed Vietnamese officials in exchange for contracts with the officials' agencies. The bribes were falsely described in the company's books as "commissions."

Lukas now faces up to 10 years in prison and a possible $350,000 fine. His sentencing is scheduled for April 6, 2010.

Nexus and the Nguyens admitted that from 1999 to 2008 they paid bribes of more than $250,000 to Vietnamese government officials in exchange for contracts. Nexus sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems.

The DOJ said Nexus acknowledged as part of its guilty plea that "it operated primarily through criminal means and agreed to cease operations."

Sentencing is scheduled for July 13, 2010. Nexus still faces a maximum fine of $27 million. Nam and An Nguyen each face a maximum sentence of 35 years in prison. Kim Nguyen faces a maximum sentence of 30 years in prison.﻿

The government hasn't released the plea agreements for Nexus and the Nguyens; the plea agreement in U.S. v. Lukas remains under court seal.

A copy of the Justice Department's March 16, 2010 release can be viewed here.

Download a copy of the October 29, 2009 superseding indictment in U.S. v. Nexus Technologies, Inc. et alhere.

A former executive of a Philadelphia-based export company pleaded guilty Monday to being part of a conspiracy to bribe Vietnamese government officials in violation of the Foreign Corrupt Practices Act.

Joseph T. Lukas, 60, a resident of New Jersey, was a partner in Nexus Technologies Inc. until 2005. He admitted that from 1999 to 2005, he and other Nexus employees agreed to pay, and knowingly paid, bribes to Vietnamese government officials in exchange for contracts with the officials' agencies. The bribes were falsely described in the company's books as "commissions."

Lukas now faces up to 10 years in prison and a possible $350,000 fine. His sentencing is scheduled for April 6, 2010.

He was arrested in September 2008, a day after being indicted by a federal grand jury in Philadelphia on one count of conspiracy to bribe Vietnamese public officials in violation of the Foreign Corrupt Practices Act and one substantive count of violating the FCPA. The indictment also charged the company and alleged co-conspirators Nam Nguyen, Kim Nguyen and An Nguyen, all U.S. citizens, with similar violations. Those cases are still pending.

According to the indictment, Nexus, a privately-held Delaware company with offices in Philadelphia, New Jersey and Vietnam, sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems to the government of Vietnam.

The indictment charged that the defendants paid at least $150,000 to officials at Vietnam’s Ministries of Transport, Industry and Public Safety to secure supply contracts. It said Nam Nguyen negotiated contracts and bribes with Vietnamese government officials while Lukas negotiated with vendors in the United States. Kim and An Nguyen allegedly arranged for the transfer of funds at Nam Nguyen’s direction.

Doing business in Asia requires relationships, trust, and the time to build them. Nexus is proud to have established, through its consistent presence and reliable performance, trusted relationships with customers.

The three other individual defendants in the case and Nexus are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.

The Virginia-based physicist who sold controlled space-launch technology to China by bribing government officials there has been sentenced to 51 months in prison. Shu Quan-Sheng (left), 68, a native of China, naturalized U.S. citizen and PhD physicist, pleaded guilty in November 2008 to one count of violating the Foreign Corrupt Practices Act and two counts of violating the Arms Export Control Act. Shu had already forfeited $386,740 to the federal government before being sentenced to prison.

Shu is the President, Secretary and Treasurer of AMAC International Inc., a high-tech company based in Newport News, with another office in Beijing. AMAC performs research through grants funded by the Small Business Research program on behalf of the Department of Energy and the National Aeronautics and Space Administration (NASA).

Shu violated the FCPA by offering "percentage points" in 2006 worth a total of $189,300 to officials at a research institute affiliated with the China Academy of Launch Vehicle Technology. He was trying to land a contract to develop a liquid hydrogen tank system for a heavy payload launch facility located on Hainan Island in the PRC. In January 2007, the $4 million hydrogen liquefier project was awarded to a French company that Shu represented.

Shu violated the Arms Export Control Act by willfully exporting a defense service from the United States to the PRC without first obtaining the required export license or written approval from the State Department. He provided the PRC with assistance in the design and development of a cryogenic fueling system for space launch vehicles to be used at the heavy payload launch facility on Hainan.

The investigation involved the FBI, U.S. Immigration and Customs Enforcement, and the U.S. Department of Commerce, Office of Export Enforcement.

In a prior post we noted that Shu's arrest in September 2008 was similar to arrests earlier that month of U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies (see our post here). They were charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA. They're accused of bribing government officials in Vietnam to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. That case doesn't yet involve charges under U.S. export laws.

Last month we reported the conviction in a Tokyo court of three Japanes executives and their company on charges of bribing a senior Vietnamese government official. The illegal payments of $820,000 were intended to secure contracts for road projects backed by Japanese aid money. In court, the recipient of the bribes was identified as Huynh Ngoc Sy, an official in Ho Chi Minh City.

Last week, the Vietnam News Agency reported the arrest of the same Mr. Sy, 56, for "abuse of power." He was the former deputy director of Ho Chi Minh City’s Department of Transport, and the former director of the East-West Highway and City Water Environment Improvement projects. After his arrest, investigators from the Ministry of Public Security’s Anti-corruption Department searched his house. Police also arrested Sy’s deputy, Le Qua, and searched his house.

In November last year, Sy was suspended from his job and banned from traveling outside Vietnam. That action came after the country's Prime Minister, Nguyen Tan Dung, directed his government to "co-operate with Japanese agencies investigating allegations that officials of a Japanese firm had bribed Vietnamese officials to get project contracts."

Vietnam's biggest aid provider is Japan. But the bribery scandal caused such a flap in Japan that it suspended aid, including low-interest loans for infrastructure projects. Vietnam's state television reported last week that following Sy's arrest, Vietnam's prime minister asked Japan to resume the loan program.

Japan has a low incidence of domestic public corruption -- it ranked 18th on the 2008 Corruption Perception Index, tied with Belgium and the United States. But until this case, it hadn't prosecuted any overseas bribery cases. In June 2008, the OECD criticized Japan for its "lagging" enforcement. We speculated that this case went to court only because it involved the misuse of Japanese taxpayer funds in the foreign aid program.

Vietnam is ranked 121st on the 2008 Corruption Perception Index, tied with Nepal, Nigeria, Sao Tome and Principe, and Togo. Despite Vietnam's corruption-prone reputation, it wasn't named in any Foreign Corrupt Practices Act enforcement actions until recently. In September 2008, U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies, were charged under the Foreign Corrupt Practices Act with bribing government officials in Vietnam. The alleged bribes were intended to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. Their trial is pending.

In December 2008, Siemens' guilty plea to FCPA books and records violations involved Vietnam. The Securities and Exchange Commission's complaint (download the pdf here) said Siemens' medical division "paid $183,000 in early 2005 and $200,000 in early 2006 in connection with the sale of approximately $6 million of medical devices on two projects involving the Vietnamese Ministry of Health." And in 2002, the complaint said, Siemens' communications division paid about $140,000 in bribes as "part of a much larger bribery scheme concocted by high-level managers at Siemens regional company in Vietnam, SLV, to pay bribes to government officials at Vietel and the Vietnamese Ministry of Defense in order to acquire Phase I of the Vietel GSM tender.".

A Virginia-based scientist who sold controlled space-launch technology to China by bribing government officials there has pleaded guilty to violating the Foreign Corrupt Practices Act. Shu Quan-Sheng (left), 68, a native of China, naturalized U.S. citizen and PhD physicist, also pleaded guilty to two counts of violating the Arms Export Control Act by delivering defense articles and services to the PRC without first obtaining the required export license or written approval from the State Department.

In 2006, Shu offered "percentage points" worth a total of $189,300 to officials at a research institute affiliated with the China Academy of Launch Vehicle Technology. He was trying to land a contract to develop a liquid hydrogen tank system for a heavy payload launch facility located on Hainan Island in the PRC. In January 2007, the $4 million hydrogen liquefier project was awarded to a French company that Shu represented.

For violating the Foreign Corrupt Practices Act, Shu faces up to five years in prison and a fine of $250,000 or twice the gross gain resulting from the FCPA offense. He also faces up to 10 years in prison and a $1,000,000 fine for each of the two violations of the Arms Export Control Act. His sentencing is scheduled for April 6, 2009.

Shu's company, AMAC International Inc., is based in Newport News, Virginia and also has an office in Beijing. According to its website, AMAC is "a high tech company operating at the cutting edge of technology." The site says because of its accomplishments "in Research & Development of Superconducting RF Power Technologies, Magnetic Levitation and Cryogenics in space, AMAC has been awarded more than $2,000,000 of innovative research grants from the US Department of Energy (DOE) and National Aeronautics & Space Administration (NASA)."

We noted in a prior post that Shu's arrest in September was similar to arrests earlier that month of U.S. citizens Nam Nguyen, Joseph Lukas, Kim Nguyen, and An Nguyen, along with their Philadelphia-based company, Nexus Technologies (see our post here). They were charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA. They're accused of bribing government officials in Vietnam to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. That case doesn't yet involve charges under U.S. export laws.

The Justice Department said it arrested four people last week on charges that they and their company bribed Vietnamese officials in exchange for contracts to supply equipment and technology to government agencies in Vietnam.

The DOJ said U.S. citizens Nam Nguyen, 52, of Houston; Joseph Lukas, 59, of Smithville, N.J.; Kim Nguyen, 39, of Philadelphia; and An Nguyen, 32, of Philadelphia were arrested after they, along with Nexus Technologies Inc., were indicted on Sept. 4, 2008, by a federal grand jury in Philadelphia on one count of conspiracy to violate the Foreign Corrupt Practices Act and four substantive counts of violating the FCPA.

The arrests are more evidence of the government's stepped-up enforcement of the FCPA and its apparent strategy to target individuals.

In April 2008, Washington Post business columnist Steven Pearlstein said the DOJ used to have the equivalent of two people assigned to FCPA cases but "now has as many as 12 prosecutors, assisted by a new team of FBI agents dedicated to these cases." And ProPublica's story about Jack Stanley's guilty plea said, "The active involvement of the FBI is particularly worrisome to [people who violate the FCPA]. In contrast to white-collar investigations handled by the Justice Department and the Securities and Exchange Commission, the FBI is believed to be prepared to use techniques more familiar to investigations of organized crime, including wiretapping and undercover agents."

According to the indictment, Nexus Technologies Inc., a privately-held Delaware company with offices in Philadelphia, New Jersey and Vietnam, sold third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems to the government of Vietnam. The indictment alleges that from about 1999 through 2008, the defendants paid at least $150,000 to officials at Vietnam’s Ministries of Transport, Industry and Public Safety to secure supply contracts. The indictment says Nam Nguyen negotiated contracts and bribes with Vietnamese government officials while Lukas negotiated with vendors in the United States. Kim and An Nguyen allegedly arranged for the transfer of funds at Nam Nguyen’s direction.

The conspiracy count carries a maximum penalty of five years in prison, a fine of the greater of $250,000 or twice the gain; and a three year term of supervised release. The FCPA counts each carry a maximum penalty of five years in prison, a fine of the greater of $100,000 or twice the gain; and a three year term of supervised release. Nexus Technologies Inc., faces a maximum $2 million fine per count, if convicted.

The DOJ's announcement said the case was investigated by the FBI and the U.S. Department of Commerce, Office of Export Enforcement. The government hasn't said whether the four individuals or their company may have violated U.S. export rules.

As the Justice Department says, an indictment is merely an accusation and the defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.